GoHaynesvilleShale.com2020-06-07T06:24:46ZOildexhttps://gohaynesvilleshale.com/profile/Oildexhttps://storage.ning.com/topology/rest/1.0/file/get/2192565970?profile=RESIZE_48X48&width=48&height=48&crop=1%3A1https://gohaynesvilleshale.com/forum/topic/listForContributor?user=02qab3bziw0qe&feed=yes&xn_auth=noRoyalty paymentstag:gohaynesvilleshale.com,2020-06-05:2117179:Topic:39089942020-06-05T15:47:40.631ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p><span style="font-size: 18pt;">Can you tell me where the price we are paid comes from? The price shown on the statement seems to be lower than the market. I know it is from two months past.</span></p>
<p><span style="font-size: 18pt;">David E.</span></p>
<p></p>
<p></p>
<p><span style="font-size: 18pt;">Can you tell me where the price we are paid comes from? The price shown on the statement seems to be lower than the market. I know it is from two months past.</span></p>
<p><span style="font-size: 18pt;">David E.</span></p>
<p></p>
<p></p> AETHON S. Timber - Knox Alloc 1H and S. Timber - King - KVG Alloc 1H - San Augustine Countytag:gohaynesvilleshale.com,2020-06-05:2117179:Topic:39088402020-06-05T13:27:35.609ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p>Does anyone have any news to report about these? It is my understanding they have been drilled but not completed. Any information would be greatly appreciated.</p>
<p>Does anyone have any news to report about these? It is my understanding they have been drilled but not completed. Any information would be greatly appreciated.</p> Goodrich Petroleum’s Rob Turnham on the Haynesville Advantagetag:gohaynesvilleshale.com,2020-06-04:2117179:Topic:39088182020-06-04T15:41:18.200ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p><strong>PATH FORWARD: Goodrich Petroleum’s Rob Turnham on the Haynesville Advantage</strong></p>
<p><strong>(Video interview, click the link)</strong></p>
<p>Goodrich Petroleum President and COO Rob Turnham discusses the strategy behind the Houston-based company’s 100% natural gas-weighted position and how the Haynesville Shale’s location helps make that successful.</p>
<p>Jessica Morales HartEnergy.com Thu, 06/04/2020 - 04:30 AM</p>
<p> …</p>
<p></p>
<p><strong>PATH FORWARD: Goodrich Petroleum’s Rob Turnham on the Haynesville Advantage</strong></p>
<p><strong>(Video interview, click the link)</strong></p>
<p>Goodrich Petroleum President and COO Rob Turnham discusses the strategy behind the Houston-based company’s 100% natural gas-weighted position and how the Haynesville Shale’s location helps make that successful.</p>
<p>Jessica Morales HartEnergy.com Thu, 06/04/2020 - 04:30 AM</p>
<p> </p>
<p><a href="https://www.hartenergy.com/exclusives/path-forward-goodrich-petroleums-rob-turnham-haynesville-advantage-187927">https://www.hartenergy.com/exclusives/path-forward-goodrich-petroleums-rob-turnham-haynesville-advantage-187927</a></p>
<p> </p>
<p>Rob Turnham, president and COO of Goodrich Petroleum Corp., sat down with Hart Energy’s Jessica Morales to take a look at the path forward for gas in the Haynesville Shale.</p>
<p>“What’s really remarkable, however, is how productive the Haynesville has evolved into over the last six years,” Turnham said. “We went from producing about 1.1 Bcf per 1,000 feet to over 2.5 Bcf per 1,000 mainly through completion methodology changes, optimization and obviously drilling longer laterals.”</p>
<p>Trying to gauge an LNG outlook into 2021, Turnham said, “It has to get better. So much of what’s been done in the past had contracts that were tied to liquids. You are seeing more and more contracts tied to JKM or a European index or something that’s really tied to more gas prices. Again, as demand improves [and] as GDPs come back to where they were or certainly close to where they were, demand will come back for LNG.”</p>
<h3><strong>Jump to a topic: </strong></h3>
<ul>
<li>Natural gas strategy <strong>(0:46)</strong></li>
<li>Winter 2020-21 demand forecast <strong>(2:51)</strong></li>
<li>Gulf Coast advantage <strong>(4:56)</strong></li>
<li>Haynesville versus other basins <strong>(7:05)</strong></li>
<li>COVID-19 impact on LNG <strong>(8:39)</strong></li>
<li>LNG outlook for 2021 <strong>(10:25)</strong></li>
<li>What will the industry look like going forward? <strong>(12:17)</strong></li>
</ul> Chesapeake Energy: An Overview And Predictions of How Bankruptcies Will Play Outtag:gohaynesvilleshale.com,2020-06-04:2117179:Topic:39086492020-06-04T13:57:51.229ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p><strong>Chesapeake Energy: rise and fall of a US shale star</strong></p>
<p><a href="https://www.ft.com/derek-brower">Derek Brower</a>, US energy editor</p>
<p>Oil and gas group once worth $35bn is flirting with bankruptcy in face of coronavirus crash</p>
<p><br></br> <em>Excerpt. Link to full article at the bottom. Good overview of CHK and future bankruptcy of others</em></p>
<p></p>
<p>Chesapeake Energy spearheaded the shale revolution a decade ago that ushered in an era of US energy…</p>
<p><strong>Chesapeake Energy: rise and fall of a US shale star</strong></p>
<p><a href="https://www.ft.com/derek-brower">Derek Brower</a>, US energy editor</p>
<p>Oil and gas group once worth $35bn is flirting with bankruptcy in face of coronavirus crash</p>
<p><br/> <em>Excerpt. Link to full article at the bottom. Good overview of CHK and future bankruptcy of others</em></p>
<p></p>
<p>Chesapeake Energy spearheaded the shale revolution a decade ago that ushered in an era of US energy independence, embodying a period of corporate extravagance as it rose to become a $35bn company. Now the indebted group is on the brink of a bankruptcy that would make it the biggest casualty of the turmoil sparked by coronavirus that is ravaging America’s oil and gas sector. Its shares have plunged 90 per cent since January, taking its market capitalisation to just $130m. Bond markets are pricing in default. A reverse stock split in April raised fears of imminent insolvency. A Chapter 11 filing is at best “a matter of weeks, not months away”, said a restructuring adviser to one of Chesapeake’s creditors, adding that this would open the floodgates for other bankruptcies across the sector. A smaller Chesapeake, freed of liabilities and more tightly focused on natural gas in the prolific Marcellus shale of the US north-east, is likely to emerge from the restructuring. Doug Lawler, chief executive since 2013, has battled for years to clean up the company’s balance sheet and lighten a $23bn debt pile amassed during a period of explosive growth under predecessor Aubrey McClendon. “He inherited a company that was unsustainable,” said a former Chesapeake executive. But the coronavirus pandemic and brutal oil-price collapse have hastened the decline. “There’s not much even a great CEO can do to change the reality of the commodity price crash.”</p>
<p> </p>
<p><a href="https://www.ft.com/content/bf230420-a570-4fcb-a2cf-3c38b5429b6f">https://www.ft.com/content/bf230420-a570-4fcb-a2cf-3c38b5429b6f</a></p> Castleton Resourcestag:gohaynesvilleshale.com,2020-06-04:2117179:Topic:39085272020-06-04T00:00:56.966ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p>Just got my first check from Castleton Resources on the old SWEPI wells. Check your statement closely if you have the same.</p>
<p>They messed up big time. Price was much better than SWEPI as well as deductions, but the volume was half of what it should be. When SWEPI split out from EXCO SWEPI kept the original owner percentages and cut the volume in half. EXCO kept the original volume and cut the owner percentages in half. Looks like Casleton cut both in half.</p>
<p>The also took…</p>
<p>Just got my first check from Castleton Resources on the old SWEPI wells. Check your statement closely if you have the same.</p>
<p>They messed up big time. Price was much better than SWEPI as well as deductions, but the volume was half of what it should be. When SWEPI split out from EXCO SWEPI kept the original owner percentages and cut the volume in half. EXCO kept the original volume and cut the owner percentages in half. Looks like Casleton cut both in half.</p>
<p>The also took deductions on a non deduction contract.</p>
<p>Their automated email reply said it could take longer than the normal 30-60 days to reply due to the Covid-19 issue.</p> Force Majeure! Valance Operating Companytag:gohaynesvilleshale.com,2020-06-03:2117179:Topic:39086152020-06-03T20:18:02.918ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p>We received this letter with our April Royalty Payment. Input please your thought, opinions and professional experience appreciated! My thought is Oil and Gas prices have been deflated several years now so deflated prices are not the whole not at the root of the whole issue here. However the construction industry never missed a beat and neither did the trucking industry. So I’m on the fence as far as their excuses. I wonder if it’s to their advantage to attempt to shut in Wells the leases…</p>
<p>We received this letter with our April Royalty Payment. Input please your thought, opinions and professional experience appreciated! My thought is Oil and Gas prices have been deflated several years now so deflated prices are not the whole not at the root of the whole issue here. However the construction industry never missed a beat and neither did the trucking industry. So I’m on the fence as far as their excuses. I wonder if it’s to their advantage to attempt to shut in Wells the leases clearly say must be in production for them to hold the lease. I am consulting with a number of professional about this as well but have found in the past 10+ yrs GoHaynesvilleShale offers many times some of the best information and leads into what’s going on I’ve found. The letter is attached below. I tried to get it to post below this and it would not. </p>
<p></p>
<p></p>
<p></p> 10 New EVs including Pick Ups coming next yeartag:gohaynesvilleshale.com,2020-06-02:2117179:Topic:39086622020-06-02T22:26:04.406ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<h1><span style="font-size: 12pt;">Link to full article at the bottom</span></h1>
<h1><a href="https://electrek.co/2020/06/02/10-electric-cars-coming-2021/">2021 is going to be the year for electric revolution – 10 new EVs coming next year</a></h1>
<p><a href="https://electrek.co/author/fredericclambert/"><span>Fred Lambert</span></a> - Jun. 2nd 2020 1:39 pm ET</p>
<p>2021 is going to be the year for all-electric cars and should greatly accelerate the electric revolution. There are so many new…</p>
<h1><span style="font-size: 12pt;">Link to full article at the bottom</span></h1>
<h1><a href="https://electrek.co/2020/06/02/10-electric-cars-coming-2021/">2021 is going to be the year for electric revolution – 10 new EVs coming next year</a></h1>
<p><a href="https://electrek.co/author/fredericclambert/"><span>Fred Lambert</span></a> - Jun. 2nd 2020 1:39 pm ET</p>
<p>2021 is going to be the year for all-electric cars and should greatly accelerate the electric revolution. There are so many new models hitting the market that it should shift the entire industry.</p>
<p>Here we look at 10 new electric vehicles coming next year:</p>
<p>First off, it is going to be the year for the electric pickup truck.</p>
<p>Several electric pickup trucks are scheduled to hit the market in 2021 and it’s the first time that this highly important segment in North America is going to get all-electric options.</p>
<p>To be fair, I wouldn’t be surprised if some of these vehicle programs slip to 2022, but for now, they are scheduled for 2021.</p>
<h2>Ford F-150 Electric</h2>
<h2>Tesla Cybertruck</h2>
<h2>Rivian R1T</h2>
<h2>GMC Hummer EV</h2>
<h2>Audi Q4 e-tron</h2>
<h2>Mercedes-Benz EQA</h2>
<h2>Nissan Ariya</h2>
<h2>VW ID.4</h2>
<h2>BMW iNEXT</h2>
<h2>Mercedes-Benz EQS</h2>
<p> </p>
<p><a href="https://electrek.co/2020/06/02/10-electric-cars-coming-2021/">https://electrek.co/2020/06/02/10-electric-cars-coming-2021/</a></p> The historic decline of US coaltag:gohaynesvilleshale.com,2020-05-29:2117179:Topic:39079212020-05-29T16:04:37.107ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p><span style="font-size: 12pt;"><strong>The historic decline of US coal</strong></span></p>
<p>Cheap gas and weak power demand have driven coal’s share of US power generation to its lowest since the 19th century. They are also accelerating its long-term downtrend</p>
<p><span style="font-size: 10pt;">29 May 2020 Opinion Ed Crooks Vice-Chair, Americas woodmac.com</span></p>
<p></p>
<p>The first commercial power plant in the US was Thomas Edison’s coal-fired…</p>
<p><span style="font-size: 12pt;"><strong>The historic decline of US coal</strong></span></p>
<p>Cheap gas and weak power demand have driven coal’s share of US power generation to its lowest since the 19th century. They are also accelerating its long-term downtrend</p>
<p><span style="font-size: 10pt;">29 May 2020 Opinion Ed Crooks Vice-Chair, Americas woodmac.com</span></p>
<p></p>
<p>The first commercial power plant in the US was Thomas Edison’s coal-fired <a href="https://energystory.org/pearl-street-power-station/">Pearl Street station</a> in lower Manhattan, which started operating in September 1882. Later that same month, the country’s (and Edison’s) second commercial power plant was started up: the <a href="https://www.asme.org/about-asme/engineering-history/landmarks/29-vulcan-street-power-plant">Vulcan Street hydro power station</a> in Appleton, Wisconsin. The race between the two technologies did not last for long. Within three years, coal had become the most-used energy source in the US, overtaking renewables including hydro power and wood.</p>
<p>In the past 15 years, however, coal’s share in the US power mix has been in steep decline. In April, coal provided just 15% of all the electricity used in the US, less than either renewables or nuclear power, according to the Energy Information Administration.</p>
<p>The EIA said this week that in 2019 <a href="https://www.eia.gov/todayinenergy/detail.php?id=43895">more US primary energy came from renewables than from coal</a> for the first time in <a href="https://www.wsj.com/articles/u-s-consumed-more-renewables-than-coal-for-first-time-in-134-years-11590691919">over 130 years</a>. That calculation actually overestimates the contribution of coal, because it compares the energy content of thermal coal, only about 33% of which is available as useful electricity, to the power provided by solar, wind and hydro. Even so, it is another milestone in the decline of coal and the rise of renewable energy in the US.</p>
<p>The latest downturn in coal started in the autumn of last year as the US went into an unusually mild winter, and it has been exacerbated this year by the coronavirus pandemic. As power demand has fallen, it has been coal-fired plants that have borne the brunt of the reduction in output.</p>
<p>US power generation was down 5% in total in April compared to the same month of 2019. Within that, gas-fired generation was up 1% and renewables up 8%, but coal-fired generation was down 32%. In many parts of the US, coal-fired plants are a <a href="https://www.npr.org/sections/coronavirus-live-updates/2020/04/23/842807177/pandemic-shutdown-is-speeding-up-the-collapse-of-coal">more expensive</a> technology for power generation than gas, wind or solar, meaning that many generation companies will look to shut them off first.</p>
<p>The way that utilities have begun to operate their coal plants has also changed, according to Matt Preston, Wood Mackenzie’s research director for North America coal markets. Previously, many utilities, particularly in the Midwest, chose to self-dispatch their coal units even when they were not the lowest-cost generation available, on the grounds that cycling the units’ output up and down increased maintenance costs. Recently that has changed, and coal plants are operating much more as the marginal units on the grid.</p>
<p>Global demand for all energy sources, including coal, is already starting to recover as lockdowns are eased. But in the US and Europe, at least, it looks as though the pandemic has accelerated the decline of coal. The outlook for coal demand now depends on policy decisions in large emerging economies, and particularly in China.</p>
<p>There was a sharp difference between the first half and second half of May, Wood Mackenzie analysts say. In the first two weeks, global demand was still soft, and the price of benchmark 6000 kilocalorie per kilogram Newcastle coal dropped to its lowest since February 2016. Since mid-May, however, there has been a marked improvement, with markets starting to tighten and prices rising. In China, the largest power generation companies in the coastal region are consuming coal at above last year’s levels, and in India power demand is rising.</p>
<p>As demand recovers, both China and India have taken steps to help their domestic coal producers. India has <a href="https://economictimes.indiatimes.com/industry/energy/power/thermal-power-plants-allowed-to-use-coal-with-high-ash-content/articleshow/76004154.cms?utm_source%3Dtwitter_web%26utm_medium%3Dsocial%26utm_campaign%3Dsocialsharebuttons">relaxed restrictions</a> on the ash content of coal burned in power plants, while in China some generators have reportedly been told to <a href="https://www.afr.com/world/asia/australia-coal-faces-china-restrictions-20200521-p54v8g">stop importing Australian coal</a>. Wood Mackenzie’s analysts <a href="https://my.woodmac.com/document/409640">said</a> the move was “targeted at stemming the flow of surging imports into China, in a bid to boost domestic prices”.</p>
<p>In the US, power companies have this year announced plans to <a href="https://www.scientificamerican.com/article/coals-decline-continues-with-13-plant-closures-announced-in-2020/">shut down another 13 coal-fired plants</a>, with closure dates between now and the 2030s. Two more will be converted to burn gas. The latest announcement was Alliant Energy’s decision <a href="https://www.wpr.org/alliant-energy-announces-plans-shutter-edgewater-coal-plant">to close</a> its loss-making Sheboygan coal-fired plant in Wisconsin. The company said the closure would save it $200 million in near-term costs. Plants that run less often because of weak demand and competition from cheap gas face a greater risk of being shut down</p>
<p>Moves by several US and European banks and other financial institutions to <a href="https://www.energyandpolicy.org/major-banks-announce-new-policies-to-help-push-utilities-away-from-coal/">reduce their exposure to coal</a> are also encouraging utilities to accelerate retirements of coal-fired plants. Georgia-based Southern Company in 2007 sourced 70% of its power generation from coal-fired plants. By the fourth quarter of last year, that was down to 22%. Southern said this week that it was on track to cut its greenhouse gas emissions by 50% from 2007 levels by 2025, and was aiming for “<a href="https://www.southerncompany.com/newsroom/news-releases.html">net zero</a>” by 2050. It joined other US utility groups including Xcel Energy, Duke Energy, Dominion Energy, NRG and PSEG, which have made <a href="https://www.greentechmedia.com/articles/read/southern-company-commits-to-net-zero-carbon-by-2050">similar announcements</a>.</p>
<p>Meanwhile in Europe, low gas prices have similarly meant that coal generation has been squeezed. Austria and Sweden closed their last coal-fired plants last month, and European governments have been working <a href="https://www.greentechmedia.com/articles/read/looming-wave-of-coal-and-nuclear-closures-puts-just-transition-concept-to-the-test">on compensation plans</a> for workers losing their jobs at power stations and in the mining industry. Dale Hazelton, Wood Mackenzie’s head of thermal coal, said he expected to cut forecasts for Europe’s consumption in the 2030s, as countries bring forward the dates when they expect to stop burning coal. Look out for the full forecast when it is published in July.</p>
<p>For global coal demand, though, the most important uncertainty is still over China. As Frank Yu from Wood Mackenzie’s China Power and Renewables team <a href="https://www.woodmac.com/news/opinion/is-china-embarking-on-a-major-expansion-of-coal-fired-power-generation/">discussed recently</a>, “there is now robust debate within China on the future [electricity] supply mix.” Already this year there has been a pick-up in the pace of final investment decisions for new coal-fired plants, and support is growing for a <a href="https://www.economist.com/china/2020/05/21/a-glut-of-new-coal-fired-power-stations-endangers-chinas-green-ambitions">new wave of construction</a>. The upcoming 14th five-year plan will be critical in determining the course of coal consumption for China and the world</p>
<p> </p> Remember "Wind Catcher"? Project Wins Approvalstag:gohaynesvilleshale.com,2020-05-29:2117179:Topic:39080012020-05-29T13:09:59.904ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p><strong>AEP Receives Enough Approvals To Move Forward With 1,485-Megawatt North Central Wind Projects</strong></p>
<p>American Electric Power Company Inc. (AEP) Press Release oilandgas360.com</p>
<p> COLUMBUS, Ohio, May 27, 2020 /PRNewswire/ -- American Electric Power (NYSE: AEP) has received approvals to enable the company to acquire the entire planned 1,485 megawatts (MW) of wind generation in Oklahoma. AEP will invest approximately $2 billion in this new renewable energy to serve its…</p>
<p><strong>AEP Receives Enough Approvals To Move Forward With 1,485-Megawatt North Central Wind Projects</strong></p>
<p>American Electric Power Company Inc. (AEP) Press Release oilandgas360.com</p>
<p> COLUMBUS, Ohio, May 27, 2020 /PRNewswire/ -- American Electric Power (NYSE: AEP) has received approvals to enable the company to acquire the entire planned 1,485 megawatts (MW) of wind generation in Oklahoma. AEP will invest approximately $2 billion in this new renewable energy to serve its Southwestern Electric Power Company (SWEPCO) and Public Service Company of Oklahoma (PSO) customers.</p>
<p>The Louisiana Public Service Commission today approved a settlement agreement that authorizes SWEPCO to add 810 MW of wind energy to serve its customers. The Commission approved an option that could increase Louisiana's allocation to an estimated 464 MW from the original 268 MW, if Texas does not also approve the SWEPCO proposal. The Arkansas Public Service Commission also accepted an option to increase its allocation when it approved the project earlier this month. The project remains under regulatory review in Texas, and SWEPCO will continue to seek that approval to allocate some of this renewable energy to benefit its customers in Texas.</p>
<p>PSO received final Oklahoma Corporation Commission approval Feb. 20, 2020, of a settlement agreement to acquire 675 MW of the project. The Federal Energy Regulatory Commission (FERC) also has approved the acquisition.</p>
<p>"Today's decision by the Louisiana Public Service Commission enables us to move forward with the North Central wind projects at full scale and invest in low-cost wind energy to benefit our customers in Arkansas, Louisiana and Oklahoma," said Nicholas K. Akins, AEP chairman, president and chief executive officer. "As AEP continues to add new clean energy to our generation portfolio, this investment is expected to save our customers approximately $3 billion over the next 30 years while supporting economic development in our communities. We will continue to seek approval to provide a share of this renewable energy to our SWEPCO customers in Texas, as we believe the projects offer significant benefits to customers across our SWEPCO footprint."</p>
<p>North Central includes three wind generation facilities located in north central Oklahoma. AEP's SWEPCO and PSO operating units announced July 15, 2019, that they would seek regulatory approvals to purchase the three wind projects. One project is expected to be completed by the end of 2020. The other two projects will be completed by the end of 2021.</p>
<p>AEP continues to make significant investments in renewable energy to serve its customers. The company's regulated integrated resource plans call for the addition of more than 8,000 MW of wind and solar and 1,600 MW of natural gas between 2020 and 2030.</p>
<p>American Electric Power, based in Columbus, Ohio, is focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions to our customers. AEP's approximately 17,400 employees operate and maintain the nation's largest electricity transmission system and more than 221,000 miles of distribution lines to efficiently deliver safe, reliable power to nearly 5.5 million regulated customers in 11 states. AEP also is one of the nation's largest electricity producers with approximately 31,000 megawatts of diverse generating capacity, including more than 5,200 megawatts of renewable energy. AEP's family of companies includes utilities AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas Panhandle). AEP also owns AEP Energy, AEP Energy Partners, AEP OnSite Partners, and AEP Renewables, which provide innovative competitive energy solutions nationwide. For more information, visit aep.com.</p>
<p> </p> Natural Gas Prices Could Double Next Yeartag:gohaynesvilleshale.com,2020-05-23:2117179:Topic:39069312020-05-23T15:29:52.759ZOildexhttps://gohaynesvilleshale.com/profile/Oildex
<p><strong>Natural Gas Prices Could Double Next Year</strong></p>
<p>by <a href="https://www.rigzone.com/news/Author/59/NicholasNewman/">Nicholas Newman</a> Rigzone Contributor Friday, May 15, 2020 </p>
<p>The EIA expects rising gas prices this fall, in line with higher winter demand for heating and a revival of industrial activity.</p>
<p>April has seen a marked reversal of fortunes for shale oil drillers in the United States. The price for May deliveries of West Texas Intermediate crude…</p>
<p><strong>Natural Gas Prices Could Double Next Year</strong></p>
<p>by <a href="https://www.rigzone.com/news/Author/59/NicholasNewman/">Nicholas Newman</a> Rigzone Contributor Friday, May 15, 2020 </p>
<p>The EIA expects rising gas prices this fall, in line with higher winter demand for heating and a revival of industrial activity.</p>
<p>April has seen a marked reversal of fortunes for shale oil drillers in the United States. The price for May deliveries of West Texas Intermediate crude briefly dropped to minus $40.32 per barrel on 20 April,[i] before rebounding to over zero. For the first time ever, traders were paying to have crude taken off their hands. The supply glut, combined with fears of limited storage space in Cushing, Oklahoma running out, is crushing the shale industry. The record low gas price, not seen since December 2009, mirrors oil since 40 percent of America’s natural gas production is associated gas derived from oil production.</p>
<p><strong>Reasons for the current low price of natural gas</strong></p>
<p>Even before the current crisis, natural gas prices were unusually low at just $2.33 in December 2019,[ii] as supply greatly exceeded demand thanks to a mild winter, a slowdown of economic growth in the U.S., China and the rest of the world as well as a glut in liquid natural gas thanks to new export projects coming online in the U.S., Africa and Australia. The arrival and spread of COVID-19 is turning things from bad to worse. “U.S. electricity demand is beginning to rapidly decline due to coronavirus-related containment measures” [iii] states Andy Weismann, CEO of EBW Analytics Group on an industry website. And, since electricity consumption is now a major driver for gas usage in the U.S., demand for gas has fallen.</p>
<p><strong>Well operators are cutting back on drilling</strong></p>
<p>Crude oil prices look subdued for the coming year according to industry observers. By contrast, some analysts expect natural gas prices to rise by the fall for, in response to low crude prices, an increasing number of E&amp;P companies are being forced to cut activity and reduce drilling budgets by between 30 and 50 percent. This is already being mirrored in a reduction in new fracked well-starts from 780 in January to just 162 in April 2020, according to recent statistics from Rystad Energy, April 2020.[iv] The U.S. government’s own estimates show output falling by 660,000 barrels per day by next year, from a peak of 13.2 million barrels a day. As crude output declines so will natural gas output and the price of the latter will rise.</p>
<p><strong>The price of natural gas could double</strong></p>
<p>The EIA’s April note forecasts rising gas prices in the autumn, in anticipation of higher winter demand for heating and a revival of industrial activity. [v] At the start of April, gas was priced at just $1.64 per million British thermal units (MMBtu), the lowest it has been since December 2009. Goldman Sachs analyst Samantha Dart expects gas prices to jump to $3.50 / MMBtu gas by winter 2020-2021 and reach $ 3.25 / MMBtu by summer 2021. Bank of America concurs but puts the rise to just $ 2.45 / MMBtu in 2021.[vi]</p>
<p><strong>Impact of higher gas prices</strong></p>
<p>The impact of higher natural gas prices could prevent hundreds of debt-laden small independent producers across Texas and the Midwest, who account for 83 percent of oil and 90 percent of gas output, from going bankrupt or shutting wells.[vii]</p>
<p>The return to better natural gas prices could incentivize E&amp;P companies to reduce flaring and venting of gas and sell this higher valued commodity to local buyers. The upcoming completion of several gas takeaway pipelines will also open access to Gulf coast LNG processing plants and gas-hungry Mexico. <strong>At this juncture, as one industry observer put it, shale oil producers should regard natural gas as their main source of income in coming months and oil as a by-product. Adding, tongue-in-cheek, perhaps crude oil should be renamed associated crude oil?</strong></p>
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